NextCard Cuts 170 Positions

Share this content:
Online credit card issuer NextCard Inc. let go 170 employees yesterday, 19 percent of its workforce.


The reductions come from all areas of the company's operations and affect its Phoenix, San Francisco and Livermore, CA, offices.


In November, the San Francisco-based credit card issuer said it was looking for a buyer and retained Goldman Sachs & Co. to shop the company around. NextCard said it hopes to be sold to a larger financial institution with the resources necessary to keep it in business.


NextCard blamed its decision to sell the company on regulators, who recently tightened lending restrictions after examiners uncovered a number of bad loans by NextCard. The regulators, who deemed the company "significantly undercapitalized," forced it to curtail its lending activities and increase its loan loss reserves, or the amount of money it puts aside to cover any losses from defaulted credit accounts.


NextCard needs $140 million to meet the bank regulators' capital requirements and cannot make most business decisions without the regulators' prior approval. The company is prohibited from acquiring funds by loan securitization or by taking deposits.


The company, which is the largest online credit card issuer in the United States, acquires its customers completely online through banner advertisements and co-branding arrangements.


NextCard said it will limit new account originations, suspend originations of secured credit cards, and either suspend or limit certain repricing programs and fee-based product strategies.


In December, NextCard received its first patent, covering its proprietary online credit underwriting and approval system.


The company's system allows it to use credit bureau data to present offers based on balance transfers from applicants. The system can generate multiple offers based on credit bureau data, applicant income and existing balances in other credit accounts.


NextCard said its system differs from other online credit approval systems in that it automatically checks an applicant's credit history and makes decisions in real time, eliminating the need for an employee to do it manually.


close

Next Article in Direct Mail

Sign up to our newsletters

Company of the Week

Brightcove is the world's leading video platform. The most innovative and respected brands confidently rely on Brightcove to solve their most demanding communication challenges because of the unmatched performance and flexibility of our platform, our global scale and reliability, and our award-winning service. With thousands of customers and an industry-leading suite of cloud video products, Brightcove enables customers to drive compelling business results.

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here

Relive the 2017 Marketing Hall of Femme

Click the image above